Fannie Mac, one of the two major U.S. mortgage-finance companies, said Tuesday it will request a 7. 8-billin-U.S.-dollar aid from the U.S. government after posting huge loss in the third quarter.
The government-backed company, confronted with a weak housing market, reported a net loss of 5.1 billion dollars in the third quarter of 2011, much more than a net loss of 2.9 billion dollars in the previous quarter.
The main reason for the increased net loss reflected the credit- related expenses and fair value losses due to further declines in interest rates, said the mortgage giant in a financial report, adding that continued weakness in the housing market and the economy overall had a significant impact on its derivative losses.
The Federal Housing Finance Agency (FHFA), along with Fannie Mae and Freddie Mac, outlined a series of changes to the Home Affordable Refinance Program (HARP) in October, to save homeowners ' money by refinancing their mortgage loans with the current lower interest rates.
The company also paid a quarterly dividend of 2.5 billion dollars to the Treasury Department as prescribed in Senior Preferred Stock Purchase Agreement, compared with 2.3 billion dollars in the previous quarter.
To offset the deficit of 7.8 billion dollars as of Sept. 30, 2011, Fannie Mac will seek the same amount aid from the Treasury, pushing the aggregate government support funding up to 112.6 billion dollars.
Fannie Mae and Freddie Mac have survived on Treasury aid since September 2008, when they were put under conservatorship by the federal government after suffering from the collapse of the subprime mortgage market.